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6. Opening of a branch

6.3. Calculation of Spanish corporate income tax

Below is a simple example of how Spanish corporate income tax and nonresident income tax is calculated on the profit obtained by a Spanish subsidiary or by the branch in Spain of a foreign company, respectively. (For further information, on these taxes, see section 2.1. of Chapter 3).

Parent company in
 UE country (1)Treaty countryNon-treaty country
Subsidiary:
Profit of Spanish subsidiary100100100
Spanish income tax (25%) (2)252525
Dividends757575
Withholding tax on dividends– (4)7.5 (5)14.25 (3)
Total tax in Spain2532.539.25
Branch:
Profit of Spanish branch100100100
Spanish income tax (25%) (2)252525
Profit remitted to the parent company757575
Withholding tax– (4)– (6)14.25 (3)
Total tax in Spain252539.5
(1) Spain has tax treaties in force with all EU countries except Denmark.
(2) The general corporate income tax rate is 25%.
(3) Withholding tax rate = 19%.
(4) Exempt, provided certain conditions are met.
(5) The withholding tax rate on dividends used in this example is 10% (the most common rate in the tax treaties entered into by Spain).
(6) The branch profit tax will apply if provided for in the corresponding tax treaty (e.g. the U.S., Canada and Brazil).